Monday DeLong David Graeber "Debt" Chapter 11 Smackdown Watch

The absence these days of what I regard as high-quality critiques of my writings on the internet poses me a substantial intellectual problem, since I have this space and this feature on my weblog: the DeLong Smackdown Watch.

So what should I do with it? Counter-smacking inadequate and erroneous smack downs is not terribly satisfying.

But there is one task from April Fool's Day 2013 left undone. Then I dealt with chapter 12 of David Graeber's Debt: The First 5000 Years in the manner that that chapter richly deserved to be dealt with. But nobody has taken an equivalent look at the earlier chapters.

So, henceforth, now, until and unless my critics step up their game, I'm going to devote the Monday DeLong Smackdown space to a close reading of chapter 11 of David Graeber's Debt: The First Five Thousand Years. Let's go!

As you may or may not remember, my initial assessment of David Graeber's Debt: The First 5000 Years, gained from skimming the first several chapters, was rather positive:

I mentioned that the standard economic accounts of the emergence of money from barter appears to be wildly wrong... this contradicted a position taken by one of the gods of the Austrian pantheon.... Credit and debt comes first, then coinage emerges thousands of years later and then, when you do find 'I'll give you twenty chickens for that cow' type of barter systems, it's usually when there used to be cash markets, but for some reason--as in Russia, for example, in 1998--the currency collapses or disappears."

Indeed. It really looks from the anthropologists that Adam Smith was wrong--that we are not animals that like to "truck, barter, and exchange" with strangers but rather gift-exchange pack animals--that we manufacture social solidarity by gift networks, and those who give the most valuable gifts acquire status hereby...

He soon fixed that:

David Graeber: Apple Computers is a famous example: it was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other's garages...

And then he gave three contradictory and inconsistent explanations of how he came to write such a sentence demonstrating a previously-unseen total cluelessness about the economy in which he lived:

The Very Last David Graeber Post...: (1) Graeber claimed that it was perfectly true, but not of Apple but of other companies (none of which he has ever named).... (2) Graeber, when questioned about the Apple passage by Mark Gimein, said that he believed he had been misled by Richard Wolff.... (3) And Graeber claimed that it was his editor/publisher's fault...

Things went downhill from there. And so when I finally got the change to read Graeber's chapter 12, on the post-1971 world, I read it with a jaundiced eye, and found dozens upon dozens of simple mistakes of fact and analysis:

the Federal Reserve is not a council of eighteen private bankers plus a presidential appointee as their chair; Korean-American shopkeepers do not long to treat everybody else in Brooklyn the way Saul and Samuel treated the people of Amalek; Apple Computer--this was a hilarious one--Apple was not founded by ex-IBM engineers who formed little democratic circles of twenty to forty people with their laptops in each other's garages.

The fact that people are as happy to hold the debt of the Swiss government than the debt of the U.S. government shows that it is not fear of being bombed by the US Air Force that makes countries seek to buy U.S. Treasury bonds; the Federal Reserve is perfectly constitutional, as is the FDA, the FCC, the EPA, the FTC, etc.; Nixon did not close the gold window because of the mounting costs of the Vietnam War; there is nothing that makes Iraq more likely than any other corner of the world to be the source of the next forward leap in human society.

The Federal Reserve does not lend private banks money at the prime rate--you really don't know whether to laugh or cry at passages like:

For those who don't know how the Fed works: technically, there are a series of stages. Generally the Treasury puts out bonds to the public, and the Fed buys them back. The Fed then loans the money thus created to other banks at a special low rate of interest ('the prime rate')...

Et cetera.

But I could not find anybody who was a subject-matter expert to give a similarly jaundiced reading to David Graeber's earlier chapters. How reliable are they, anyway? Are they any more reliable than his chapter 12?

And now, with the absence of high-quality DeLong smackdowns, I have an opportunity find out. Until and unless my critics step up their game, I'm going to devote the Monday DeLong Smackdown space to a close reading of chapter 11 of David Graeber's Debt: The First Five Thousand Years:

There are things to make one very uneasy here:

The subhead: 1450-1971. Nearly all--hell, all--historians would say that even in northwestern Europe 1450-1971 is at least four different periods that need to be sharply distinguished: the waning of the middle ages; the commercial revolution/age of reformation; the industrial revolution/age of revolution; and modern economic growth/mass society. And that is just looking at western Europe alone: It simply makes no sense to pretend that the economic processes and institutions in Spain's age of the mesta are usefully treated in one lump with the economic processes and institutions of America's midwest's age of General Motor. In tens of the economy--the amount of real, useful goods produced, exchanged, and consumed--more happened worldwide between 1450 and 1971 than had happened previously since the emergence of language.

Lumping these at least four periods together as one "age of the great capitalist empires" is thus going to lead to confusion: 1450 is very, very, very different from 1971.

And starting the period in 1450 and ending it in 1971 is odd as well. Richard Nixon's abandonment of the Bretton Woods system is not the end of any important story, or the beginning of any important story. And what is 1450 supposed to mark? The Fall of Constantinople to Mehmet II? But that happened in 1453...

The initial quote with which Graeber begins the chapter is also very odd. Capitalism is about how the coming of wage labor and the separation of private property in land and assets from more thick-tie social relationships creates a world in which people are the puppets of market forces as transmitted through the prices at which they buy and sell. Debt peonage is when there is one and only one person from whom you have to be--the patron, the latifundista--one and onl one person to whom you can sell--again, the patron--and, soon and inevitably, one and only one person to whom you try to pay the interest on your debt. Debt peonage originated long before the rise of capitalism. If you are talking about an age of capitalism, shouldn't your header quote have something to do with it?

Debt peonage is a form of serfdom. What does it have to do with great capitalist empires? Very little. How does debt peonage require a great capitalist empire to support it? It doesn't. How do great capitalist empires depend on debt peonage? They don't. If there is a strong connection here, it is not obvious to me...

Now these two--major--false notes at the very beginning of Graeber's chapter 11 are not errors, precisely. They are not mistakes on the order of claiming that Steve Jobs and Steve Wozniaks worked on laptops in a garage when they started Apple Computer. But they are signs that Graeber does not have the amount of control over his subject he really ought to have...

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Monday DeLong David Graeber "Debt" Chapter 11 Smackdown Watch

The absence these days of what I regard as high-quality critiques of my writings on the internet poses me a substantial intellectual problem, since I have this space and this feature on my weblog: the DeLong Smackdown Watch.

So what should I do with it? Counter-smacking inadequate and erroneous smack downs is not terribly satisfying.

But there is one task from April Fool's Day 2013 left undone. Then I dealt with chapter 12 of David Graeber's Debt: The First 5000 Years in the manner that that chapter richly deserved to be dealt with. But nobody has taken an equivalent look at the earlier chapters.

So, henceforth, now, until and unless my critics step up their game, I'm going to devote the Monday DeLong Smackdown space to a close reading of chapter 11 of David Graeber's Debt: The First Five Thousand Years. Let's go!

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